E 506 
.1 
385 

Copy 1 



Il.H- 



' y § ^'^ ■^"'^«- 



AN APPEAL 



STATE OF INDIANA 



CONGRESS 



TO MAKE PROVISION FOR THE PAYMENT OF CER- 
TAIN OF HER WAR EXPENSES. 



■ r - 



THE CLAIM OF INDIANA 

AS IT WAS 

.PRESENTED BY THE STATE 



TREASURY DEPARTMENT OF UNITED -STATES, 



WITH THE 



EVIDENCES IN SUPPORT OF THE SAME, AND WHICH 

CLAIM IS NOW PRESENTED TO CONGRESS 

FOR ITS ACTION THEREON. 



THE UNITED STATES, 

To The State of Indiana, Dr. 

For amount of discount on $2,000,000 of Indiana War 

Loan Bonds $243,107 51 

For amount expended for printing said Bonds, and putting 
tiiem on the market, including brokerage, and sala- 
ries and expenses of Loan Commissioners 1,685 39 

For amount of interest paid on said Bonds to May, 1868.. 362,186 51 

Total per itemized statements herewith filed $606,979 41 

DISCOUNT ACCOUNT. 

INDIANA WAR LOAN BONDS. 

Principal of the Loan $2,000,000 00 

Less Discount , 243,107 51 

Amount realized in cash from the Loan $1,756,892 49 

EXPENSE ACCOUNT. 

INDIANA WAR LOAN BONDS. 
Voucher. 

A. Ray, Brown and O'Boyle, Loan Commissioners $390 00 

B. Jesse J. Brown, Loan Commissioner 108 00 

C. Jesse J. Brown, Loan Commissioner 503 95 

D. John II. O'Boyle, Loan Commissioner -. 88 50 

E. James M. Ray, Loan Commissioner 228 17 

F. James M. Ray, Loan Commissioner 64 32 

G. James M. Ray, Loan Commissioner 96 00 

H. .Jesse J. Brown, Loan Commissioner 77 45 



[2] 

J. James M. Ray, Loan Coniniissioner 23 00 

K. Jesse J. Brown, Ix)an Commissioner 56 50 

L. J. II. O'Boyle, Loan Commissioner ■!*' ^0 

Total ^^'^^^ ^^ 

Original vouchor.s for above expenses filed with tlie Auditor of 

State, are herewith forwarded. 

P. S. The above vouchers are numbered in Auditor's office 2347, 

and were paid out of Military Bond Expense Fund. 

INTEREST ACCOUNT. 

INDIANA WAR LOAN BONUS. 

Paid interest May 1, 18G2 $33,645 00 

Paid interest October 1, 1862 36,765 00 

Paid interest May 1, 1863 36,765 00 

Paid interest October 1, 1863 36,765 00 

Paid interest May 1, 1864 36,000 00 

Paid interest October 1, 1864 35,000 00 

Paid interest May 1, 1865 27,480 00 

PaidinterestOctober 1,1865.. 27,000 00 

Paid interest May 1, 1866 25,972 42 

Paid interest October 1, 1866 26,973 67 

Paid interest May 1, 1867 25,440 00 

Paid interest October 1, 1867 8,350 42 

Paid interest May 1, 1868 G,030 00 

Total $362,186 51 

State of Indiana, ss.: 

The undersigned, Governor, Auditor and Treasurer of State, cer- 
tify that the foregoing account, amounting to six hundred and six 
thousand nine hundred and .seventy-nine dollars and forty-one 
cents, is correct and just; that the discount charges and interest 
therein charged has been paid by the State of Indiana in pursuance 
of an act of the Legislature, entitled " An Act to authorize the 
Governor to issue Bonds; to appoint a Board of Loan Commis.sion- 
crs, and defining their duties; requiring the Sinking Fund Com- 
uiis.sioners to purchase Bonds; defining their duties in relation to 
the interest received on the ,sune; and levying a tax to meet the 
payment of the interest and i)rincipal of the J5onds to be sold," ap- 
proved May 13, 181)1; that the Bonds of the State were issued in 
pursuance of said act to the amount of two millions dollars, par 
value, and that the same were sold, after due notice, at a discount of 
two hundred and forty-three thousand one hundred and seven dol- 
lars and fifty-one cents, as per report of the Loan Commissioners, a 
printed copy of which is herewith filed and made part hereof; that 



[ 3 ] 

the State incurred, and paid in and about the sale of said honds, 
including printing, brokerage, salaries and expenses of Loan Com- 
missioners, the sum of one thousand six hundred and eighty-tive 
dollars and thirty-nine cents ; and that the State has paid, on account 
of interest which has accrued on said Eonds up to the first day of May, 
A. D., 1868, the sum of three hundred and sixty-two thousand one 
hundred and eighty-six dollars and fifty-one cents. 

We further certify that at the outbreaking of the late war, known 
as the War of the Rebellion, the State Treasury was almost entirely 
without funds, and that to enable the State to properly respond to 
the calls of the President of the United States for troops for the 
common defense of the United States, and to properly raise, organ- 
ize, arm, equip, subsist, quarter, pay and transport, said troops, it 
became, and was necessary, to raise money by loan upon the credit 
of the State, and that, in consequence of said necessity, the Bonds 
hereinbefore referred to, amounting at their par value to the sum of 
two millions dollars, were issued and sold as aforesaid, under and by 
authority of the act aforesaid. 

And we further certify that the moneys realized from the sale of 
said Bonds, amounting to the sum of one million seven hundred and 
fifty-six thousand eight hundred and ninety-two dollars and fortv- 
uine cents, were set apart as a Military Fund, and that the same 
were paid out upon proper and duly authenticated vouchers for ex- 
penses growing out of the said War' of the Rebellion, and incident 
thereto, and properly chargeable to the United States, to-wit: in 
raising, organizing, arming, equipping, subsisting, quartering, pay- 
ing and transporting troops for the military service of the United 
States. 

Wherefore, we claim that the United States is justly indebted to 
the State of Indiana in the said sum of six hundred and six thous- 
and nine hundred and seventy-nine dollars and forty-one cents, for 
discount, interest, charges, and expenses incurred and paid for the 
benefit of the public service, as above set forth. 

STATE I Witness our hands and the seal of the State, at Indian- 
SEAL. ( apolis, this twenty-sixth day of May, A. D., 1868. 

(Signed) Conrad Bakek, 

Lieutenant Governor of Indiana, acting as Governor thereof. 
(Signed) Nathan Kimbale, Treasurer of State. 

(Signed) T. B. McCaety, Auditor of State. 

Attest : 
(Signed) Nelson Trusler, Secretary of State. 



[-t] 

DECISION OF THIRD AUDITOR REJECTING SAID 

>LAIM. 



fM 



INDIANA WAR CLAIMS, ^fSSWP INSTALLMENT — THIPxD AUDITOR'S 
DIFFERENCE SHEEET. 

The claim for "interest" paid on "NYar Loan Bonds," anionnting 
in the a,<i:gregate to §362,180.51, disallowed. 

Interest can not he alloired by the executive branch of the government 
in the settlement of any claims against the government, unless author- 
ized by express enactment of the legislative pover. The following de- 
cision was made by the Second Comptroller, dated October 11, 1867, 
in reply to letter of the Third Anditor, dated October 2, 1867, as 
follows : 

Sir — A claim has been made by the State of Rhode Island for 
the refunding of the interest paid by that State in raising money to 
repay the costs, charges and expenses incui-red for enrolling, sub- 
sisting, clothing, supplying, arming, e([uipping, paying and trans- 
porting its troops employed in suj)pressing the recent rebellion, and 
as similar claims are held by all the loyal States, it is deemed best 
to submit it to you as an abstract question. 

Several opinions of the Attorney General, Comptroller, etc., have 
been referred to authorizing the allowance of such claims, a brief 
abstract of which is here given : 

1. In Opinions of Attorney (icneral, vol. l,page 723, Mr. Wirt 
held that interest, when paid by a State, forms a just claim against 
the United States. This opinion was given on the act of March 
3, 1825, (vol. H, p. 132,) which authorizes the payment of interest, 
and of course is not authority for such payments when not sjieci- 
fically authorized by law. 

2. Attorney General J. J. Crittenden, (vol. 3, p. 635,) held that 
interest on claims for losses by troops is not allowable. 

3. Attorney General Legare, (vol. H,p. 136,) states that the gov- 
ernment in general refuses to jx\y interest in the absence of a special 
contrat't. 

4. Attorney (general Reverdy Johnson held (vol. 5, p. 228 and 
231,) that interest has l)een paid when there was no express provision 
in the law. This was Avith reference to the Galphin case, for the 
payment of which an act was passed August 14, 1848, (vol. 9, p. 
731),) but would be an unfortunate precedent to those who Avould be 
guided by it in paying interest. 

Hon. J. J. Crittenden (vol. 5, p. 455,) held that interest should 
be allowed the State of Florida upon all expended and obligations 
contracted for sup[)lies and services of local troops called into ser- 
vice in 1841), by and under the authorities of said States, when it 
shall ai)pear that said State has paid, lost, or incurred interest on 
that account. *, 

JON i:u • " 



Hon. E. J. Phelps, Second Coini)tro]ler, niuintained the same 
doctrine, (vol. 15, p. 34,) but that Jrt^vwiif1<-'i' the clause of the act 
of February 27, 1851, (vol. U, p. 57p^SV!^ provides for reimburs- 
ing Florida for moneys advanced and patTf, and for expense.'^ incurred 
and obligations contracted by said State for subsistence, sup})lies and 
services of local troo])s, etc. The words underscored would seem to 
sanction the construction given to this law by these gentlemen ; and 
are different and much stronger than those used in the act of 1801, 
Avhich we are now considering, and yet, in view of the uniform 
action of Congress and the Executive on this subject, I would not 
have recommended the payment of interest in this case without more 
speciiic action by Congress on it. 

In the case referred to in your "Digest," j)ages 32 and 33, the 
allowance was made to the State of Maine, not under usage, but in 
accordance with specific provisions of law. Sec act of February 9, 
1859, (vol. 11, p. 382,) directing payment to State of Maine, pur- 
suant to ])rovisions of act of June 2, 1848, (vol. 9, ]). 236,) the third, 
section of which ])rovides that in refunding money under the act, 
•etc., it shall be lawful to ])ay interest at the rate of 6 per cent, per 
annum on all sums advanced by State, etc. The last reference is to 
your " Digest," page 101, where it is stated that interest is not al- 
lowed, except granted in express terms by act of Congress. • When 
the condition of the country is considered at the time these expenses 
were made, the heroic efforts of the loyal States to sustain our coun- 
try in this the time of her greatest trial, it is clear, in my ojiinion, 
that Congress should authorize the refunding not only of the inter- 
est j)aid to raise money, but of all expenses, drawbacks, etc., in fact, 
of every dollar paid by any such State, directly or indirectly, in 
support of this holy cause, but I am clearly of the opinion that the 
accounting officers of the Treasury have no power so to refund 
Avithout the action of Congress. 

Respectfully submitted, 

John Wilson, 

Auditor. 
Hon. J. M. Brodhead,. 

Second Comptroller. 

APPROVAL OF THE SECOND COMPTROLLER OF THE 
DECISION OF THIRD AUDITOR. 

TREASURY DEPARTMENT, 

Second Comptroller's Office, 

October 11, 1867. 
Sir — I have the honor to acknowledge the receipt of your report 
of the 2d inst., in which it ai)pears that "a claim has been made by 
the State of Rliode Island for the refunding of the interest ]niid by 
that State in raising money to defray the costs, charges and expenses 
incurred for enrolling, subsisting, arming, equipping, paying and 
transporting its troops employed in suppressing the recent rebellion." 



The authorities you eite are clear and positive that interest can 
not be allowed by the executive branch of the government in the 
settlement of any claims against the government, unless authorized 
by express enactment of the legisUitivo power or indubitable infer- 
ences from the general terms of a statute. The conditions precedent 
to the payment of interest in the claims presented are not found in 
the acts of July 17 and 27, 1861, authorizing the payment of cer- 
tain State claims, and I therefore concur with you in the reasons 
adduced against the allowance of the above claim. 

Very respectfully, your ol)edient servant, 
(Signed) ' ' J. M. Brodhead, 

Comptroller. 
Hon. John Wilson, 

Third Auditor. 
The claim therefore for interest is disallowed — ^362,186.51. 

APPLICATION OF THE STATE MADE TO THE SECRE- 
TARY OF THE TREASURY TO AUTHORIZE THE 
COMPTROLLER AND AUDITOR TO REVIEW AND RE- 
STATE THE ACCOUNT, AND TO ALLOW THE INTER- 
EST PAID ON HER WAR LOAN BONDS, AND REASONS 
THEREFOR. 

The claim of the State of Indiana for interest paid on her war 
bonds, issued in 1861, amounting to S362,186.51, it will be seen^ 
therefore, has been disallowed by the Treasury Department. 

The bonds were issued under the authority of the act of the Le- 
gislature of Indiana of ]May 13, 1861, which is as follows: 

"AX ACT to authorize tlie Crovernor to issue Bonds; to apjioiiit a IJoard of Loan 
Commissioners, and defining tlieir duties; requiring the Sinking Fund Commis- 
sioners to purchase Bonds ; defining tlieir duties in relation to the interest received 
on the same, and levying a tax to meet the payment of the interest and principal 
of the Bon(f^ to be sold. 

[AprRovi:D May 13, 1861.] 

Section 1. Be it enacted hy the Genercd As.se)id)Ii/ of the State of 
Indiana, That for the purpose of obtaining money for re])elling in- 
vasion, and ))roviding for the public defense, the Governor is author- 
ized to issue two million dollars of Bonds; of which said issue of 
two million, the sum of two hinulred thousand dollars shall be in 
bonds of the denomination of five hundred dollars each, and the 
residue of the said issue of two million dollars shall be in bonds of 
the denomination of one thousand dollars each ; all of said bonds 
drawing interest at the rate of six per cent, per annum, ])ayable 
semi-:innually, on the first days of ^Liy and November in each year; 
said Ixtnds to have coupons, or interest warrants attached ; the first 



[7] 

of which shall become due on the first day of May, 1862 ; the in- 
terest which may fall due between the date of the sale and the first 
day of November, 18G1, shall be paid in advance. The bonds shall 
be made payal)le to bearer, twenty years after date, the interest pay- 
al)le on presentation and surrender of coupons, as they become due ; 
both bonds and coupons to be payable at the Indiana Agency, in the 
city of New York. 

The bonds shall be signed by the Governor, and countersigned by 
the Auditor, numbered and registered in the office of the Auditor and 
Secretary of State, and shall be in the following form in substance : 

INDIANA SIX PER CENT. BOND. 

No. 
500 Five Hundred Dollars. 500. 

1000 One Thousand Dollars. 1000. 

Know all Men by thc^e Presents: That there is due from the State 

of Indiana, unto the bearer, the sum of dollars, with 

interest at the rate of six per cent, per annum, payable semi-an- 
nually, on the first days of May and November of each year, at the 
Indiana Agency, in the city of New York, on presentation and de- 
livery of the proper coupons, which appear on the margin hereof. 
The principal of this bond is to be paid in twenty years from the 
date hereof, at the Indiana Agency in the city of New York, and is 
one of an issue of two millions of dollars of bonds issued by the 
State of Indiana, in denominations of five hundred dollars and one 
thousand dollars each, jnirsuant to an act of the General Assembly, 
approved , 1861, entitled "An act to authorize the Gov- 
ernor to issue bonds ; to appoint a Board of Loan Commissioners, 
and defining their duties; requiring the Sinking Fund Commis- 
sioners to purchase bonds; defining their duties in relation to the 
interest received on the- same ; and levying a tax to meet the payment 
of the interest and principal of the bonds to be sold." 

FORM OF COUPON. 

The State of Indiana will pay the bearer, on the day of 

, at the Indiana Agency in the city of New York, 

dollars, it being the semi-annual interest on her bond, No. — . 

Sec. 2. For the purpose of negotiating said bonds, Hugh Mc- 
Culloch, James M. Ray and John H. O'Boyle are hereby apjwinted 
a Board of Loan Commissioners, who shall each receive as a com- 
pensation for their services as such commissioners, five dollars per 
diem, fi)r each day they, or each of them, may be actually engaged in 
negotiating said loan, together with their expenses ; and the Gov- 
ernor shall deliver said bonds, when prepared, signed, and registered 
as aforesaid, to said commissioners, taking their receipt therefor, 



with the number antl denomination of each bond, and shall file said 
receipt with the Auditor of State ; which said commissioners shall 
disi)ose of said bonds, as the wants of the treasury may require, or 
as, in their judgment, will promote the best interests of the State; 
and the money arising therefrom, together with all exchange, and 
any premium which may acei-ue, or may be received l)y said com- 
missioners, except so much thereof as the Treasurer of State may 
require for payments in the city of Xew York, shall be paid by said 
commissioners into the State treasury as soon as received by them, 
taking the receipt of the Treasurer of State therefor, and file said 
receipt with the Auditor of State, who shall charge said Treasurer 
therewith; and the said Board of Loan Commissioners shall, on the 
first days of August, November, February, and May, of each year, 
file with the said Auditor of State a report containing the number 
and denomination of bonds sold and the price received therefor, and 
the time -when sold ; and that said Loan Commissioners shall each 
file with the Auditor of State a bond in the penalty of two hundred 
thousand dollars, to be approved by the Governor, for the faithful 
discharge of their duties, and the prom]:>t ]iayment to the proper offi- 
cer of all moneys that may come into their hands as such commis- 
sioners ; and the Treasurer of State shall file his receipt for the 
amount with the Auditor of State, designating therein the amount 
of each denomination of bonds sold, and the amount obtained for 
the same, Avho shall charge the Treasurer therewith. 

Sec. 3. The ]>oard of Sinking Fund Commissioners are hereby 
directed to purchase of said Loan Commissioners said bonds, at ]wr, 
to the extent of the money they may have on hand subject to dis- 
tribution for the ])urpose of being loaned, and the interest, when 
])aid by the State upon said bonds so purchased, shall be disposed of 
in the same manner as the interest arising from loans of the Sinking 
Fund to individuals. 

Sec. 4. In case a vacancy or vacancies shall occur in said Board 
of Loan Commissioners, l)efore said bonds are disposed of, or in case 
any of said commissioners shall refuse to serve as such, it shall be 
the duty of the (Governor to appoint some suitable })erson or persons 
to fill such vacancy or vacancies, and said apj)ointee or appointees 
sluiU hold his or their office until the next meeting of the Legisla- 
ture, either in general or special session, and such appointee or ap- 
pointees shall give bond with the original commissioners. 

Sec. 5. For the purpose of paying the interest semi-annually, 
and the final payment of the ])riueipal at maturity, on the bonds in 
the first section mentioned, an annual tax of five cents on each one 
hundred dollars in value of the taxable })roperty of this State is 
hereby levied, commencing in the year 18(jl, and the excess of 
money collected by said tax, each year, after paying the interest as 
it becomes due, shall be ))aid to the Sinking Fund Connnissioners, 
who shall purchase these bonds if they can procure them on reason- 
able terms, and if not, then to invest the same in other Indiana State 
stocks; said commissioners keeping a record of the number and 



amount, and price paid for such hond.s, and ironi whom purchased ; 
at the first session of the Lejjislature thereafter, said commissioners 
shall report the amount and number of such l)onds or stocks, the 
price paid for the same, and from whom ])urchased, and rendering 
an account of such funds received since their last report; and im- 
mediately thereafter it shall be the duty of the Committee on Fi- 
nance in the Senate, and Committee of Ways and Means in the 
House of Representatives, to count said bonds and examine the 
same, and said Sinkinsi; Fund Commissioners shall, then and there, 
in the presence of said committees, destroy said bonds and stocks, 
keeping a record and description of such destroyed bonds and stocks ; 
and for the final payment of said bonds, with the interest tliereon, 
the faith of the State is irrevocably pledged. 

Sec. 6. In case it becomes unnecessary to sell all of said bonds, 
such unsold bonds shall be returned to the Auditor of State, wdio 
shall register their number and denomination, and they shall then 
be destroyed in the ])resence of the Auditor, Treasurer and Secre- 
tary of State, and the fact shall be recorded by the Auditor, and 
signed by him, the Secretary and Treasurer of State. 

Sec. 7. The tax herein provided for the payment of the inter- 
est and the gradual liquidation of the principal, shall not be dimin- 
ished, but the same shall be levied and collected annually, until the 
bonds herein authorized to be issued shall have been paid or re- 
deemed. 

Sec. 8. Nothing in this act shall be so construed as to require 
the continuance of the existing office of Agent of State, but the Le- 
gislature may at any time hereafter, in its discretion, select any 
person as Agent of State, and any place in the city of New York 
as tlie office of the Agency, under the provisions of this act: Pro- 
vided, That notice of the person and place in said city be given by 
the Governor of the State of Indiana immediately, in one or more 
daily papers in the city of New York, by thirty days' publication 
thereof. 

Sec. 9. Inasmuch as the ordinary revenue of the State is insuf- 
ficient to meet the necessary expenses growing out of the present 
insurrectionary acts of certain States in the Union, it is hereby de- 
clared that an emergency exists; therefore this act shall take eft'ect 
and be in force from and after its passage." 

The act of Congress to indemnify the States is as follows: 
(12th U. S. Statutes, 276.) 
AN ACT to indemnify the States for expenses incurred by them in 
defense of the United States. 

Be it enacted by the Senate and House of Representatives of tlie 
United States of America in Congress assembled, That the Secretary 
of the Treasury be, and he is hereby, directed, out of any money in 
the Treasury not otherwise appropriated, to ])ay to the Governor of 
anv State, or his duly authorized agents, the costs, charges and ex- 
])enses "properly incurred by such State for enrolling, subsisting, 



[10] 

clothing, .supplying, arming, eciuipping, paying and transporting its 
troops employed in aiding to suppress the present insurrection against 
the United States, to be settled upon ])ropcr vouchers, to be filed 
and passed uj)on by the proper accounting officers ot the Treasury. 
Approved July 27, 1861. 

Congress, in passing the act of July 27, 1801, passed it with 
reference to the liabili-ty of the States incurred at that time. To 
put at rest the question as to whether the law covered expenses pay- 
able in the future, the explanatory Joint Resolution of March 8, 
1862, was passed : ''That the said act shall be construed to apply to 
expenses incurred as well after as before the date of approval there- 
of." (12 U. S. St. Glo.) This advance was made to the United States 
under a statute passed before the passage of the act of 1861, but in 
view of the well known law of the case as declared l)v statute, by 
the courts and by the opinions of the Attorney General of the 
United States, who had given opini(»ns on similar claims, the State 
of Indiana understood full indemnity of [)riiuM[)al and interest would 
be made. The facts and circumstances existing at the time, and laws 
previously jiassed in relation to the subject-matter, may be referred 
to, to determine tlie meaning of the law. We call attention to the 
following statutes: 

The ordinance for settling the accounts between the United States 
and individual States of May 7, 1787 (1 Laws U. S. ed. 1815, p. 
662,) j)roved that interest on such accounts, at the rate of o per 
cent, per annum, should be allowed. (See McKee vs. the United 
States, 91 U. S. Reports, 442, 10 Court of Claims, p. 234.) A large 
number of private acts were passed, settling voluntary claims, in 
Avhich interest was allowed the claimants. States, and Cities were 
allowed interest for advances made i)v them for the United States 
A\here they jv.iid or lost intcivst. 

Interest was allowed the State of Delaware on war claims by the 
act of May 20, 1826. (4 U. S. Stat. 175.) 

Also to':Maryland, by the act of May 13, 1826. (4 U.S. St. 161.) 
Also to New York. Act of May 22, 1826. (4 U. S. St. 192.) 
Also to Pennsylvania. Act of March 3, 1827. (4 U. S. St. 241.) 
Also to South Carolina. Act of March 22, 1832. (4 U. S. St. 499.) 
Also t.> Virginia. Act of March 3, 1825. (4 U. S. St. 132.) 
Also to city of Baltimore. Act of >ray 20, 1826. (4 U.S. St. 177.) 
Also to Mayor and ( "ity Council of Baltimore. Act of April 2, 
1830. (St. 411.) 

I)y the act of April l-S, 1(S14, the Secretary of State was author- 
ized to li(|uidate according to the jirinciph's of justice and equity 



[11] 

all the claims of the inhabitants of the late province of West Flo- 
rida '^ * * for advances by them made for the use and benefit 
of the United States. (6 U. S. St. 139.) 

By the act of April 9, 1818, an appropriation was made for the 
discharging of the above claims, " including principal and interest," 
showing that the State Department considered interest equitably due 
under the statutes. (See 3 U. S. St. 422.) 

Advances were made by individuals and the Territory of Florida 
in 1839 and 1840 to the United States, which were authorized to be 
settled by the acts of August 23, 1842 (5 St. 522), August 31, 1842 
(5 St. 518), March 3, 1843 (5 St. 628). By the last statute the 
claims were to be settled "upon principles of jnstice and equity," 
under the direction of the Secretary of War. By joint resolution^ 
March, 1845, (5 St. 797) the statutes were held to include "advances 
on loans of money made to provide for the defense of the inhab- 
itants." 

Under these statutes, §12,000 was paid to the Territory of Florida^ 
September 9, 1842. 

Bonds weref issued, under the territorial act of March 4, 1839, in 
the sum of $100,000, to procure supplies, and holders of the bonds 
presented them to the Treasury Department and received principal 
and interest out of the appropriation. The Florida bonds to the 
full amount of principal and interest, which were paid at the Treas- 
ury, could not have been paid until examined and allowed by the 
accounting officers and directed by the Secretary of War to be paid. 
5i< ;i< :^ They were paid as the proper debts of the United States. 
(5 Opinions of Attorney General, 401.) In the opinion the right of 
the State of Florida, to reimbursement of interest paid out by her for 
military services in 1849, was sustained as lawful under the terms of 
the act of February 27, 1851, which provided for reimbursing the 
State of Florida " under such rules and regulations as have heretofore 
governed the readjustment of similar claims of the several States for 
moneys advanced and paid." (See opinion of John J. Crittenden, 
Attorney General, 5 Opinions, 463-4.) 

Alabama furnished supplies, etc., for the United States in 1 836-7, 
which the Secretary of War was authorized to re-adjust " under 
such laws and regulations as have heretofore governed the settle- 
ment in auditing and allowing the claims of the States on the United 
States for moneys advanced," etc. (Act Aug. 16, 1842, 5 U. S. St., 
506.) By the statute of January 26, 1849, the Secretary of War 
was direojted to pay six per cent, interest on such advances. (9 U. 
S.. St., 344.) 



[12] 

By the statute of June 30, 1834 (4 U. S. St., 721), full indemnity 
to citizens of Georgia for losses by the Creeic Nation of Indians 
prior to 1802, included six per cent, interest from the origin of the 
claim to date of adjustment. 

By the act of March 3, 1851, six per cent, interest was allowed 
to the State of Georgia on all advances made by her to the United 
States for the suppression of Indian hostilities in 1835-6-7-8, from 
the date of the advances to the date of the payment of the principal 
sum by the United States. (9 U. S. St., 626.) 

At the same date the accounting officers of the Treasury were 
authorized and directed to liquidate and settle the claim of the State 
of Maine against the United States for interest upon the money bor- 
rowed and actually expended by her for the protection of the North- 
eastern frontier in 1839, 1840, and 1841. (9 U. S. St., 626.) 

The same rule was established by the joint resolution of March 3, 
1847, to refund to States and persons the expenses incurred by them 
for the United States. (9 U. S. St., 206.) By the amendatory act 
of June 2, 1848, this was extended to cover all expenses, and the 
third section enacted that "in refunding moneys under this act and 
tlie resolution which it amends, it shall be lawful to pay interest at 
tlie rate of six per centum i)er annum on all sums advanced by 
♦States, corporations, or individuals in all cases where a State, corpo- 
ration, or individual paid or lost the interest, or is liable to pav it." 
(9 U. S. St., 236.) 

This amendatory act is a legislative declaration that ("expenses") 
includes the item of interest, and the general rule which had gov- 
erned these contracts between the States and the United States, to 
pay interest paid or lost, was thus expressly reaffirmed. 

Tlicse statutes show that where interest was paid or lost by a 
State, it was held to l)c an expense incurred and justly and equitably 
due the State. 

The United States enforces the payment of interest on money 
l)aid after it is due, as a matter of equity. (See United States vs. 
Gurney, 4 Cranch, 131.) 

" The United States have no prerogative to claim one law upon 
their own contracts as creditors, and another as d(;btors. If, as 
creditors, they are entitled to interest; as debtors, thev are bound 
also, to pay it." {>^fory, J., in Thomdike vs. Vnited States, 2 Mass., 
20; Charles Hirer Bridge vs. Waner Bridge, 11 JVter, 611.) 

Where the government guarantees state bonds, and pavs interest 
ibr the State, it provides ior reinbursement. (Sec. 481, Rev. St., p. 
694.) 



[13] 

As held by the Supreme Court of the United States in United 
States vs. 3IcKee, et al., 1 Otto, 450, the rule of refusing interest on 
unliquidated claims is not uniform, and the case was held to be 
within the rules of the claims covered by the act of 1791, where in- 
terest was to be paid. The court also held the adjudication as to 
the State of Virginia to be binding upon the United States as to 
the allowance of interest, and as there was no dispute about the 
amount due if the claim was legal, it was a liquidated sum, and the 
government was bound to pay it in full, '' with all its legal incidents 
as the State of Virginia should and would have paid it, had not 
the liability been assumed by the United States when she received 
the cession of that immense country." {Ibid 451.) 

Our case is like this case. The legal interest to be paid was a 
liquidated sum before the passage of the act of 1861. It was paid 
by the State as agreed. It was a legitimate expense, and is covered 
by the amendatory act of 1862, which covers expenses to be paid 
after the date of the act of 1861. Having been paid, the United 
States dares not dispute the amount, but the comptroller wrongfully 
applies to this liquidated sum the rule which applies to unliquidated 
demands. 

The Attorney Generals of United States have held as follows : 
Attorney General Wirt — " The principle is this : the United States 
are bound by the relation which subsists between the general and 
State governments to provide the means of carrying on war, and it is 
a part of the business of war to provide for the defence of the sev- 
eral States Avhen the United States failed to make such provisions, 
and the States have to defend themselves by means of their own 
resources; the expenditure thus incurred forms a debt against the 
United States which they aro bound to reimburse. If the expend- 
itures made for such purpose are supplied from the treasury of the 
State, the United States reimburse the principal without interest, but 
if, being itself unable, from the condition of its own finances, to meet 
the emergency, such State has been obliged to borrow money for 
the purpose, thus to incur a debt on which she herself has had to pay 
interest, such debt is essentially a debt due by the United States, 
and both the principal and interest are to be paid by the United 
States." (1 Opinions Atty. Genl., 721, June 25, 1825.) He also 
held, (2 Opinions, 33,) that "the interest, according to the nsage of 
nations, i&a necessary part of the just indemnification by the Emperor 
of Russia." Attorney (General J. McBarien, in refusing the allowance 
of interest on commutations, held the case to be within the class of or- 



[14] 

dinuiy claims against the governineiit — " whieli, however undoubt- 
t'd, are not payable until demanded, and then without interest 
unless the claimant shall have paid interest, in which case, indeed, inter- 
est becomes a portion of the principal of his claim." (2 Op., 392.) 
Attorney General B. F. Butler held that a private law for the relief 
of James Thomas according to equity and JHstice includes the allow- 
ance of interest, because it was not inconsistent with the terms of 
the law, although not expressly named, because the decision of the 
oourt referred to in the act gave interest, and also because in look 
ing into the original contract and all the papers, he found "the 
I'laim to interest is agreeable to equity and justice." (3 Opinions Atty. 
Gen., 295.) Attorney General H. L. Legare held that when an ac- 
count was adjusted by the comptroller under a s^jccial act, and no 
allowance was made for interest, under the imjM'ession that interest 
ought not to be allowed, and the present comptroller and his prede- 
cessor who made the mistake, admit that the act did not allow in- 
terest ; tiiat the claimant on proof that he was not allowed interest, 
was entitled to have the case reopened and interest allowed up to 
the adverse decision. That the claimant has had incurred heavy losses 
for the public good, " and would not have been indemnified for his 
sacrifice by repayment of the principal. Fortunately, however, for 
his representative, he was not left to stand upon the equity, just and 
and manifest as it was, of the case. The statute expressly proy/Jed 
for the alloirance of interest, and if it was not taken into considera- 
tion in the adjustment finally made, the statute law has not been 
executed according to its ti"ue meaning and intent," (4 Op., 80.) 
Attorney General Nelson — That the United States was liable for 
interest on a protested draft of its minister on the ground that 
^'when the United States, by its authorized officer, became a ])arty 
to negotiable pa])er, tiiey have all the rights and incur all the re- 
sponsibilities of individuals M'ho are parties to such instruments." 
(4 Op., 299.) Congress having authorized the second Auditor of the 
Treasury to examine and adjust the claims of the legal representatives 
of Geo. Fisher deceased " on principles of equity and justice " under 
the act of April 12, 1848, for losses in 1813, the second Auditor held 
the value of the property t:d<en or destroyed with interest ui)on it 
was to be paid "as a full and fair indemnity." Attorney General 
Isaac Taney held that interest at the rate of 6 })er cent, per year 
should l)e allowed from the date of taking or destruction. (5 Op. 

71.) 

An act authorizing the Secretary of State to adjust the claim of 



[15] 

Jos. I). Ijca. Friinciu, lor sii])[)lic'S furn itched in Wci.st Floridas, ":ic- 
conling to princij)los of cHjuity and justice/' passed August 14, 1848, 
Secretary Jno. M. Clayton referred the case to Attorney-General 
Reverdy Johnson, who decided that "the propriety and obligation 
therefor of allowing interest upon them are not to he esteemed 
open questions." (5 Op. 109.) Also, that interest at the rate of six 
per cent, should be allowed from the date of the claim to August 
14, 1848, on the ground that it would be unjust to deny interest 
during the interval when the accounting officers refused to allow the 
claim. 

That "every principle of equity and justice jirescribes a different 
rule, and the act requires those principles to govern the liquida- 
tion." {Ibid 1]0.) 

Commutation ])ay, but not interest, was allowed the heirs of Arm- 
.stead, on the ground that Virginia did not allow interest. (Ibid 164.) 

Interest was allowed the estate of Commodore Barron, as in ac- 
cordance with Virginia decisions and former decisions of Attorney 
General. {Ibid 227.) 

In the Galphin claim, the law for auditing the account made no 
reference to interest, but the Attorney General held that it was of 
the same character as the Virginia commutation cases, and that in- 
terest up to the date of the passage of the act should be allowed. 
{Ibid 231.) 

The opinions of Attorney General Gushing, on the allowance of 
interest on the postal contract, conforms to the law in such cases, 
but is not a guide for the case in question, as it refers to ordinary 
and unliquidated claims. (7 Opinions 523.) 

The uniform construction of an act of Congress by the Treasury 
Department is entitled to respect in the courts, but being ex parte, 
can not conclude them. This was the rule in United Stcdes v. Dickson, 
15 Pet., 162, relating to the bond of a receiver of public money, 
the court held that the act must be construed "upon the same prin- 
ciples by which we ascertain the interpretation of all other laws; by 
the intention of the legislature as it is to be deduced from the lan- 
guage and the apparent object of the enactment." {Ibid 162.) 

The contracts of the sovereign are subject to the same rule as those 
of private persons. United States vs. Wilder, 3 Sumner, 316; 
United States vs. Barker, 12 Wheat., 561. 

This claim under the statute in question must be construed, with 
reference to the rule of construction, that "What is implied in a 
statute is as much a part of it as what is expressed." United States 



[ 1^> J 

vs. Rabbit, 1 Black., 61 ; Gelpcke vs. City of Dubuque, 1 Wall.. 221 ; 
Mayor vs. City of Muscatine, 1 Wall., 393; Groxall vs. Shererd, 5 
Wall., 283; Kennedy vs. Gibson et al., 8 Wall., 507; Butz vs. City 
of Muscatine, 8 Wall., 581 ; United States vs. Hudson, 10 Wall., 406 ; 
Stewart vs. Kahn, 11 Wall., 507; Lynde vs. 77*6 County, 16 Wall., 
13; Z>ar/.s vs. Gra^/, 16 AVall., 223; 7Ju//% vs. United States, 19 
Wall., 40; Telegraph Co. vs. £'(/.se/-, 19 Wall., 427; Cornett vs. I17A 
Hams, 20 AVall. 251. 

Another rule of construction should be followed in this case: 
"Courts, in the construction of contracts, look to the language em- 
pl9yed, the subject matter, and the surrounding circumstances; they 
are never shut out from the same light which the parties enjoyed 
when the contract was executed, and in that view they are entitled 
to place themselves in the same situation as the parties who made 
the contract so as to view the circumstances as they viewed them, 
and so to judge of the meanings of the words and of the correct 
application of the language to the things described." Nash vs. 
Towne, 5 Wall., 699. And we insist that Congress, in construing the 
act of July 27, 1861, should be governed by the same rule. 

Indiana claims that there is due to her from the United States 
8362,186.51 for interest paid on her '' War I^oan Bonds." 

She claims this because the act of July 27, 18()1, authorizes and 
requires the accounting otticers of the Treasury Department to pay it. 

She claims it because it was a legitimate and proper expenditure 
under the circumstan<'es. 

She claims it because the United States had no money, and to 
raise, arm and equip the troops, money was necessary; the State did 
not have this money, and was, therefore, compelled to borrow it to 
pay these expenses, and, as a consequence, was compelled to pay in- 
terest on the money borrowed. 

She claims that to refuse to pay back the money thus expended 
by her is unjust, and is not carrying out the true sjiirit and intent of 
the law. 

She insists that the principle on which the claim here made is 
based, has been repeatedly recognized by the government in similar 
cases prior and subsequent to the passage of the act of July 27, 
1861, as will appear from the precedents cited above. 

She claims that when Congress passed this act, it did so in the 
light of all previous rulings of the government in like cases. 

She claims that rulings and decisions made prior to the act of 
July 27, 1861, were necessarily considered by Congress when this 



[17] 

law was passed, and that the interpretation given by the accounting 
officers, by Congress and the courts, to like provisions in similar 
cases, would be given in interpreting this law. 

We now call attention to what we deem a })roper interpretation of 
the act of July 27, 1861, without reference to any precedents. 

The act of July 27, 1861, is as follows: "Be it enacted, etc., 
That the Secretary of the Treasury be, and he is hereby, directed 
out of any money in the Treasury not otherwise appropriated, to 
pay to the governor of any State, or to his duly authorized agents, 
the cost, charyes and expenses properly incurred by such State for 
enrolling, subsisting, clothing, supplying, arming, equipping, paying 
and transporting its troops employed in aiding to suppress the pres- 
ent insurrection against the United States, to be settled," etc. 

Does not the claim here presented fall within the provisions of 
this act ? Was not the interest paid by the State a part of the " cost, 
charges and expenses" intended to be covered by this act? How 
could the purpose have been accomplished without this expenditure? 
In order to raise it she was compelled to issue bonds, and to pay in- 
terest on the bonds; the interest suffered and paid by the State 
formed a })art of the debt. 

Should there be any two opinions on this question ? Can there be ? 

If the State had not raised the money by issuing bonds, the 
United States would have been compelled to raise it in the same 
way. She would have had to borrow money and pay interest. The 
State then issued her bonds and raised the money instead of and in 
the room and place of the United States. The State paid the interest 
the United States would have been compelled to pay if she had is- 
sued the bonds. We then ask, upon what principle of justice or 
equity can the government refuse to pay a debt she would have been 
required and compelled to pay if the State had not paid it. Can it 
be said that because the State came forward and loaned her credit, 
borrowed money for the United States, and paid her debts, and in 
doing so, and in order to raise the money, j)aid the same interest the 
United States would have been compelled to pay if it had borrowed 
the money, can the government in common honesty say this is inter- 
est, and the government does not pay interest? And this because 
of the presumption that the government is always ready to pay all 
her just obligations. While this is true as a rule, it is not true in 
p dnt of fact. We do know that when the war began there was 
an empty treasury, the bonds of the United States were being sold 



[18] 

at a discount, and with all these facts staring us in the face, we are 
met with this rule as an answer to our just demand. 

When it is shown that the United States did not have the money, 
but was com])elled to resort to loans to furnish any money, the rule 
is not applicable. 

This is not interest in the light contemplated by the rule, that the 
government will not pay interest. It is as much a part of the debt 
as the bonds themselves were. If the money had been in the State 
treasurv, then the State would not have been compelled to borrow 
monev, but she Avas in the same condition financially that the United 
States Mas — she did not have it. 

These then being the facts in the case, was not this expenditure a 
part of the " cost, charges and expenses properly incurred by the 
State?' There can be no question but that it cost the State the 
amount claimed to raise the money. There can be no question but 
that these sums expended were expended on account of " enrolling, 
subsisting, clothing, supplying, arming, equipping, paying and trans- 
porting its troops employed in aiding to su})j)ress the rebellion." 
Were they properly expended? This is matter of evidence — the 
proofs show it was. If the sums so expended were properly ex- 
pended, and formed part of the necessary "cost, charges and ex- 
penses," etc., is the State not entitled to recover the money thus 
expended? If not, for what reason? Can any valid reason be 
assigned? We submit that there can be none, for none exists. 

What do the various Avords of the act of July '21, 1861, mean? 
The language is " cost, charges and expenses." Webster says the 
word "cost" means "amount paid, charges, expenses, loss of any 
kind, detriment, to require to be given or expended for, to require 
to be borne or suffered." 

The word "expense" he says nu-ans, first, " The act of expend- 
ing, disbursement, that which is expended.' The word "expended" 
he says means "To employ in any way; to consume by use." 

In the connection in which the words are used, the Mords cost, 
charges and expenses mean substantially the same tiling. These 
several words were used to make the act bi'oad and comprehensive, 
to prevent a narrow, s)aaU or teeJmical construction. Congress was 
then legislating upon a great and important subject, one that was 
more important than money. It was one that was more important 
than life. It was the life of this nation that Congress was leaisla- 
ting for. And Congress did not intend that any narrow or techni- 
cal construction should be given to the words used, therefore all the 



[19] 

Avords wore used flint wore nocossary to cover all the proper expon- 
diturcs that wore to ho. made by the States in purchasing arms, 
equipments, etc., for the troops. Under the circumstances, could 
the purposes of the act have been accomplished without borrowing 
the money? The State did not have it — she could only get it by 
issuing her bonds and selling them. Then, if the money could be 
obtained in no other way, was not this interest paid " projyerly'^ ex- 
l>ended"? Was it not a necessary part of the "costs, charges and 
ex])enses" provided for in this act? We think there can be no 
question but that this expenditure by the State is a legal and legiti- 
mate claim to be allowed and paid under this act. 

But it is said by the Comptroller, that the act under which this 
opinion was given, authorizes the payment of interest, a)id of course 
is not authority for such payment, when not specifically authorized 
by law. We attempted to show that the claim here made was sjje- 
cificaUy mdhorized by law ; it is authorized by the act of July 27, 
18G1, because it was a part of the "cost, charges and expenses" ol 
• raising, arming and equiping the troops, etc. It was speeificaUij 
aiUhorized, because the interest paid was a part of the amount neces- 
sarily \>\\\i{ by the State for the purpose of enabling the State to per- 
form the object contemplated by the act, and is as fully embraced 
by the act as was done, in the act of 1825, referred to in the opinion 
of the Attorney General. 

AVe only claim for money actually expended actually auth(^ized 
by the act of ]8()1. 

We do not claim interest on our claim for expenditures. We 
only claim for money paid out to raise the money to pay the ex- 
penses authorized by the act of 1861. This claim is so clearly dis- 
tingui.shable from a claim for interest, within the rule established by 
the government, that it would seem to argue it would be a waste of 
time. The distinction has been recognized by all, adopted and acted 
upon by the Second Com])troller. It is said that it was done under the 
act of twenty-seventh of February, 1851, vol. 9, p. 573, because it 
provides for reimbursing Florida for moneys advanced and paid, and 
for expenses incurred and ohlUjidions contracted by said State for sub- 
sistence, sujjplies and services of local troops, etc. He thinks this lan- 
guage is much stronger and more comprehensive than the language 
used in the act now under consideration. Is it? The act of 18(il re- 
quires that the States shall be reimbursed for all '*cost, charges and 
expenses proj)erly incurred by such State for enrolling, subsisting, 
clothing, supplying, arming, equipping, paying, and transporting its 



[20] 

troops, oniploycs," etc. Is not this language nmch stronger and 
more comprehensive than that used in the Fh)rida act? In that act 
tl)(' words "obligations contracted" are used. Do these words 
cover more than those used in the act of 1861? Under this act the 
government is required to pay the "cost, charges and expenses 
properly incurred," etc. Could any other conceivable matter be 
covered? If so, what is it? 

Attention was called to the definition of the words used in the 
act of July 27, 1861, to show their broad and comprehensive mean- 
ing; further comment would seem unnecessary. The money was 
paid out by the States; it was em])loyed and expended in order to 
get the money that paid for the arms, equipments, etc. It was a 
})art of tiie amount paid — a part of the charges incurred by the 
State; it was a loss to the State, because it was paid out; it was dis- 
bursed by the State ; it was required to be borne and suffered by 
the State; therefore we submit that it was much broader language 
than that used in the act to reimburse Florida. There is no ques- 
tion but that Congress intended to reimburse the State for such ex- 
penditures. It was contemplated at the time that the States should 
furnish the money to pay these expenditures by lending their credit, 
by borrowing the money. Will or can any one presume that those 
members who voted for this bill in Congress, were so narrow, so 
small that they intended to induce the States to borrow this money, 
pay yiterest for it, and tiien, after they had done so, say we did not 
intend to pay you back this interest? The government never pays 
interest; it is contrary to her policy to pay interest. Oh, it will 
never do to pay you the interest you were compelled to pay, though 
it w^as a part of the cost, charges and expenses incurred. Interest 
can not be paid. Can any honest man say this and look his neighbor 
square in the face? Is it honest so to act; is it obeying the law? If 
I should say to my neighbor, lam in trouble, am in danger of losing 
all I possess; come to my aid, do all you can to save me from de- 
struction, from ruin ; pay the cost, charges and expenses, and I will 
reimburse you ; I will pay all the cost, charges and expenses you' 
may properly incur in saving me, and I say to him 1 have no money, 
(this is what the United States said in effect — she did not have it,^ 
you raise the money, and I will j)ay you the cost, charges, etc. ; and 
after I am saved, and all is secure, I turn upon my neighbor and say 
1 will pay you all except the interest you paid on the money you bor- 
rowed, can't jVay that ; I have a rule that no interest is to be paid ; 
I am wealthy, and the presiinipti(^n is I have the money to pay all 



[21] 

my (lel)ts ; T can not ])ay you interest, though. If I Imd honest 
neighbors, how long woukl I be permitted to remain in that locality 
and enjoy the society of honest men (on the assumption that I could 
not be sued without my consent.) 

If the government refuses to pay this interest, suffered and paid 
by the States, she assumes the position above indicated. A great 
government should not put herself in such a position, and I can not 
think, when this question is carefully considered, she will do so. 

IIUI.ING OF SECRETARY OF THE TREASURY ON 
APPEICATION TO ALLOW ACCOUNT. 

TREASURY DEPARTMENT, 

Office of the Secretary, 
Washington, D. C, June 27, 1878. 

To the Secretary : Application of the State of Indiana that the 
Comptroller of the Treasury be directed to review and restate the 
account of that State against the United States, and allow |362,- 
186.51-100, being the amount of interest paid on her war loan bonds 
as " expenses" incurred under the act of Congress of July 27, 1861. 

This claim was presented to the Treasury by the authorities of the 
State of Indiana, on May 26, 1868, and was disallowed by the ac- 
counting officers. The facts were then stated substantially as now, 
to-wit : That the State, at the breaking out of the rebellion, was 
Avitliout funds, and that she issued in good faith, and at fair rate of 
interest, bonds to the amount of $2,000,000, for the sole purpose of 
aiding in suppressing the rebellion, and that the money thus raised 
was properly expended in good faith for that purpose, and the amount 
claimed was actually paid as interest on said bonds. 

It is alleged that the Comptroller made a mistake in matter of 
fact in this : That he treated the claim as interest upon an account 
as if the money had been on hand in the State treasury and ad- 
vanced for the purposes named, instead of being an actual payment 
of interest upon bonds issued solely for such war purposes. It is 
true that the Comptroller based his opinion on the report of the 
Auditor on the claim of the State of the Rhode Island for interest 
on money advanced by her for similar purposes, but that he misap- 
prehended the fact in that regard in the Indiana case, can not be 
possible, because, as before stated, the first application of the State 
of Indiana distinctly states the facts as now stated, that the claim 
was not for interest upon money which the State had in its treasury, 



[ 22 ] 

mid advancotl, but it Mas for iutorost actually paid out upon bonds 
siK'cialiy issued for the ])urposo of suppressing the rebellion, and 
kept entirely separate from her other funds. It is claimed, also, that 
the Comptroller made a mistake of law in this, that he decided that 
the interest tiuis paid on said bonds was not an ''expense" under 
the act of Congress of July 27, 1801, whereas he should have held 
it to have been legally a ])art of such "ex])enses." AVithout dis- 
cussing the question whether, after the lajise of ten years, the pres- 
ent Comptroller can legally overrule, upon his own opinion of the 
law, the opinion of his predecessor, I think the application must be 
rejected for reasons which I will proceed to state. 

The claimant's attorneys have cited authorities to show that in- 
terest upon claims of similar character for money expended by 
States iu aid of the United States government in other wars, has 
l)een allowed, and some cases are cited showing that the Attorney 
General and other officers have, in some cases, made the distinction 
between iutei'est u})on money merely advanced by such States, 
and interest paid upon money borrowed for the specific purpose. 
The authorities on this point are numerous and som(!what conflict- 
ing. Most of those now cited by the claimant are cited in the 
opinion of the Third Auditor upon the Rhode Island claim, to 
which ex})ress reference is made by the Comjitroller in his first re- 
jection of this claim. It is difficult, upon equitable principles, to 
maintain the distinction suggested, because it would seem that money 
advanced out of its general funds by a State largely in debt for gen- 
eral purposes, is as much entitled to bear interest as money borrowed 
for the specific purpose. Payment of interest, in either case, is a 
burden upon the State borne for tiie same cause. It is unnecessary 
to look at the authorities upon the subject further than the case of 
the Ignited States vs. McKee et ciL, (91 U. S. Reports, j). 442,) which 
has been cited by the claimant, and is the latest, as well as the high- 
est, authority upon the point. In that case the court, with two dis- 
senting voices, decided that the claim of the heirs of Francis Yigo, 
on account of supplies furnished by him in 1778, to a Virginia reg- 
iment, was entitled to bear interest. The claim was allowed under 
an act of Congress, which referred it to the Court of Claims, with 
power to adjust it, "and in making such adjustment and settlement 
the said court shall be governed by the rules and regulations hereto- 
fore ado])ted by the United Stat(\s in the settlement of like cases," etc. 

A long list of similar cases was cited in which Congress had ex- 
pressly allow(!d interest. The Court of Claims allowed interest upon 



[23] 

the claim and found that "no rules and regulations have heretofore 
been adopted by the United States in the settlement of like cases, 
except what may be inferred from the policy of Congress in passing 
private acts for the relief of various persons." When. passing such 
private acts " Congress has allo\yed interest upon the claim up to 
the time when the relief was granted." And it was upon the 
ground that this statute intended to award interest upon this partic- 
ular claim, that the Supreme Court affirmed the allowance by the 
Court of Claims. 

The rule that the United States does not pay interest, except in 
cases where Congress expressly authorizes it, seems to be generally 
admitted. Justice CliiFord, who dissented in the McKee case, states 
the general principle no doubt correctly, as follows : 

" Unless where the contract is expressed to that effect, the United 
States are not liable to pay interest. Interest should never be al- 
lowed on old claims when payment has been deferred because the 
accounting officers of the Treasury were of the opinion that further 
legislation was necessary to authorize their allowance, unless the 
new law clearly provides for the payment of interest as well as 
principal." 

In the case before us, the claimant contends that the act of Congress 
did provide for the payment of this claim as part of the " expenses" 
claimed to be paid. The accounting officers in 1868 thought other- 
wise, and I think this department should regard the question as res 
adjiidicata. 

It is clearly an equitable claim, but not more so than the claims 
of several other States for interest on money borrowed or advanced 
for the same patriotic purpose, and which Congress alone has power 
to allow. 

This brings me to my last proposition, which is, that this claim 
and others like it, have already been presented to Congress and 
there received some consideration. 

December 6, 1872, Mr. Morton in the Senate of the United States, 
by unanimous consent had leave to bring in a bill "to refund to the 
States the interest on money borrowed to equip, pay, supply, and 
transport troops for the service of the United States in the recent 
war." 

The bill was read twice and referred to the committee on military 
affiairs and ordered to be printed, and a copy of it is with the papers. 

We have in many cases acted upon the principle which is found 
in FuUar's case (4 Opinions of Atty. Genl., 429), to-wit : 



[24] 

A claimant who appeals to Congress after an unsuccessful appli- 
cation at the department, must abide by his election whether the 
result be favorable or otherwise. 

I think this principle can be wisely applied to a case like this, 
which is a representative of a large class, involving very large 
amounts and affecting several of the States. Such cases are peculiarly 
entitled to the consideration of Congress. 

For these reasons I think the direction to the comptroller to open 
and restate the account should not be given. 
Very Respectfully, 



Endorsed as follows: 

Approved, 



H. F. French, 

Asst. Secretary. 



John Sherman, 

Secretary. 



The State of Indiana is now compelled to come to Congress and 
ask that provision be made for the payment of a claim that is Ad- 
mitted by the department to be just and equitable, but one that can 
not be paid by the executive branch of the government. The Second 
Auditor says in his decision on this claim, "When the condition of 
the country is considered at the time these expenses were made, the 
heroic efforts of the loyal States to sustain our country in this the 
time of her greatest trial, it is clear, in my opinion, that Congress 
should authorize the refunding not only of the interest paid to raise 
money, but of all expenses, drawbacks, etc.; in fact, of every dollar 
paid by any such State, directly orindirectly, in support of this holy 
cause ; but I am clearly of the ojiinion that the accounting officers 
of the Treasury have no power so to refund without the action of 
Congress." 

Secretary Sherman, in ruling on the a})prication of the State to 
open and allow tliis account, uses the following language : " If is 
clearly an equitable claim, but not more so than the claims of several 
other States for interest on money borrowed or advanced for the 
same patriotic purpose, and which Congress alone has power to 
allow." 

AVe ask Congress to make provision for the payment of this claim, 
because it is just, and because it is honestly due. 

In the brief presented to the Secretary Ave called attention to the 
several acts of Congress, the rulings of the Attorney General, the 



[25] 

decisions of the Court of Claims and the Supreme Court, and thus 
show that chiims of the same nature of this have been paid by the 
government without a single exception. No claim of this character 
has ever been rejected, and we think no such claim should ever be. 

In the case of United States vs. McKee et al., (91 U. S. Supreme 
Court Reports, from page 445 to 447, inclusive,) in the argument of 
counsel reference is made to the several acts of Congress allowing 
interest on war claims. The position assumed by counsel is fully 
approved by the Court. 

This claim is not for interest claimed to have accrued on an un- 
liquidated claim in favor of the State against the United States, but 
it is a claim for interest paid by the State for the use and benefit of 
the United States — money expended for her. 

Therefore, the claim here made is much stronger, and more equit- 
able, than any of the cases referred to in the McKee case. 

The bill only provides for the payment of the claim for interest 
paid on her War Loan Bonds. She abandons the claim for dis- 
count suffered, etc. 

T. W. Woollen, 
Attorney General of Indiana. 

C. A. BUSKIIIK, J. & M. TlUiMBLE, R. G. c't E. C. IiNGERSOLL, 

J. C. Denny, of Counsel. 
3 



LIBRftRY OF CONGRESS 



013 21 



1 258 7 % 



